Investment opportunities roses cut-flower farm
By Ismat Sabir
Roses are no more the symbol of khoon-e-gigar of an aashiq, now they have commercial value as well. Growing cut flowers, especially roses, is a very profitable business if done properly on commercial basis. Demand for cut flowers, especially roses and tulips, are growing tremendously as more and more people are becoming aware of the beauty of flowers as decorative items. They are the best gift at weddings, birthday parties, seminars, and other such social gathering. Events of joy and sorrow are incomplete without floral decorations.

Growing cut flowers is not a new phenomenon in floricultural sector of Pakistan; however, it is an infant industry as far as its growth is concerned. The rich soil provides ideal agronomic conditions for the production of flowers. Despite lack of knowledge about modern floricultural production techniques, difficulty in obtaining the latest varieties, and the lack of infrastructure, the industry is attracting new entrants.

The main reason for the slow development of this sector is due to the lack of interest on the part of progressive and big farmers to enter this field. The credit goes to small and poor farmers who have kept on going without much technical or financial support over the years.

Pattoki serves as the centre for floricultural activity in Pakistan. Though Kasur and Sheikhupura districts have also developed some expertise in this field, yet Pattoki still serves as the hub market for all floricultural trade. Pattoki 'mandi' is the major forum for buying and selling of fresh cut flowers, especially roses. From Pattoki, flowers are distributed to all parts of the country including Karachi, Peshawar, Lahore, and Islamabad.

This article would provide general information on the opportunity for an investor in the floricultural sector to develop cut flowers farm of roses for supply in local market. Roses are the most traded of all cut flowers varieties around the world. The trend in Pakistan is no different. These cut flowers can also be exported to Middle Eastern countries, as there is great demand of roses in these countries.

Besides earning money, gardening helps keep the environment clean and beautiful. Growing roses on commercial basis is a capital-intensive project, but the high returns as compared to any other agricultural venture makes it economically viable. Low cost of labour combined with very reasonable land lease rates and suitable climatic conditions for most part of the year serve as the basis for making this project attractive. Rose plants are easily available from nurseries and are very cheap, say Rs10 per plant.

The project can be started on one acre of land, which would gives a return of Rs30,000 to 60,000 per annum. However, a farm of 5 acres would be economically viable considering the amount of effort and money required and returns expected. Besides rose growing fields, another two kanal of land is required to perform post-harvesting functions and other related chores like area for sorting, washing, drying, packing and other related facilities. Land is to be obtained on lease. For this project no big pacca construction is required. Only a small 10'x10' room would be enough for storage purpose. Besides storage room, one proper shed is also required. The shed should have a covered area of 40'x40' with open sides for air passage. This area is to be used for washing, sorting, packing, and other post harvest activities.

Basic farm tools and fixtures include tools for pruning the plants, picking the flowers, and removing leaves, etc. Besides these tools, other fixtures are required including clean water hand pump, tables, tubs, wooden crates and fans. All items are easily available in the market.

Process

Picking (early morning); washing in clean water; treatment with life enhancing solution; drying with natural air; packing in wooden or cardboard boxes; distribution via train or by truck, sales and marketing can be done through wholesalers.

Whatever pre-harvest and post harvest handling techniques are used would directly result in the quality of the flowers.

Domestic market of cut flowers, especially for different varieties and colours in roses is growing fast. There are two main market segments for flowers:

(a) retail sales to individual consumers

(b) wholesale sales to corporate and institutional customers

In all the major cities of the country there is number of retail outlets selling all kinds of flowers. These outlets could be a roadside small corner shop to a proper retail outlet shop in five-star hotels. These shops are either fed directly from farms or through a middleman or distributor. Some shops buy directly from 'mandi.' Buying directly from the farm give bigger shops access to better quality flowers and better profit margins for both, farm owners as well as shopkeepers. But this setup is quite rare. Ninety-per cent purchases are made through the distributors, who are the supplier to most of the small shops in the cities. A major advantage of buying from distributors is the availability of credit facility.

Besides retail outlets, the major buyers are corporate and institutional customers. These include hotels, offices and most importantly party decorators and marriage halls. All these institutional as well as corporate customers are fed by wholesale dealers and distributors. They buy flowers in bulk quantities. For party decorators high quality is not an issue as they use flowers only for a few hours. As far as hotels and offices are concerned, quality is an important issue. But again as flowers are changed everyday, they don't need long life product. Long life flowers are required mainly for export purposes.

Some small traders have developed another sale channel. They buy roses from Pattoki mandi in the morning and bring their product to Begumkot (Sheikhupura District) mandi and re-sell it on small profit margin. From Begumkot mandi either the shopkeepers or wholesale distributors and traders buy this stuff and sell in cities like Lahore, Faisalabad, Gujranwala, etc.

Following inputs are required

Flower plants

Roughly 11,000 plants would be planted in each acre; approximately 4 sq. ft area for each rose plant is required. The plants can be purchased from a commercial nursery. New plants are grafted in July by the nurseries and are ready to be transferred to the field in January.

Starting from January, these six months old plants at the farm are to be taken-care till October. Water, pesticide spray, fertiliser, and labour requirements remain the same as those of a commercially running farm. Rose flowers produced during this development stage are not cut along with stem from the plant. Only the flower is picked but not sold commercially because it is not yet fit for commercial sale. From November commercial production is started. In all 54,450 plants of roses would be required. Each six-months' old plant may cost Rs10, on an average. The average life of a rose plant is 5 years. After 5 years all the plants would have to be replaced with new ones.

Water

Is a regular requirement of flower plants, as is for any other living thing. If fresh canal water were available, this would be the ideal situation for plants and would cut the expenses of installation of a tube-well and the electricity or diesel cost of running that tube-well. However, to be on the safe side water-pump should also be installed at the farm. The average cost of water and upkeep of water channels would be about Rs1,500 per acre per year. During April, May and June, fields are irrigated every week. Otherwise the normal practice is irrigating every 20-25 days.

Labour

The general formula for labour is one person per acre, excluding one foreman or a farm manager. Thus, five labourers would cost Rs1,20,000 per annum. These labourers would also act as pickers, cleaners, sorters, packers, etc.

Pesticides

To prevent fungus, spray of pesticides is required, which would cost Rs25,000 per acre per year.

Fertilisers

Flower plants require DAP, potash, and ammonium nitrate fertilisers for proper yield. Sometimes one or two bags of urea are also required. This would cost about Rs22,000.

Packing

Rose flowers are either packed in specially designed wooden crates or in cardboard cartons. Each wooden crate can carry about 25-30 kg flowers (roughly 60 individual stems weigh one-kg). For long distance transportation, an 8-10 kg, ice block is also placed along with flowers to keep their temperature down. Cardboard cartons are usually used for short distance transportation. If they are to be used for long distance transportation, ice packed in plastic bag, is also placed in each box for cooling effect. Usual gross weight for cardboard cartons is 15-20 kg. Wooden crates are reusable over longer periods of time. About 100 boxes are enough to keep a cycle of rotation going. Flowers packed in wooden crates and cardboard cartons are transported to big cities from Pattoki via train.

Output

Production of rose flowers has different seasonal variations. Between November and March, maximum yield is obtained, assessed to be about 70 per cent of total production in a year. From mid-April till mid-June, there is no flower for commercial sale. From mid-June till October, the situation gets better steadily and slowly. On an average, one plant of rose flowers has an average yield of 50 flowers per year. Out of these 50, about 20 flowers are not up to the required standard and are destroyed either by man handling or by some disease. These are sold as petals. Therefore, only 30 flowers per plant per year are available for commercial sales. Sale price also depends on season, quality and size of flowers. However, the average selling price per flower over the period of 12 months, comes 80 paisa. Sale is done on credit and usual credit period is 15 days.

In the first year only two months production would be available for commercial sales. Next year about 80 per cent capacity would be available for commercial production and in the third year farm would be operating on full capacity.

Financial analysis

Total investment Rs12,68,038

Total capital investment Rs7,63,040

Total working capital Rs5,04,998

Project IRR 27 per cent

Payback period 3.59 years

Precautions

Flowers are perishable products with a limited life span. Without any life enhancing treatment, its shelf life is three to four days, maximum. Therefore, flowers should be transported from the field as soon as possible in order to take advantage of its short life.

There are certain diseases that can affect flowers detrimentally, but timely pesticide sprays act as a defence against such threats.

There are only few major players in this industry. Therefore, there is great potential for new investors who want to do farming on progressive lines. For assistance SMEDA can be contacted.

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